July's Purdue/CME Group Ag Economy Barometer shows Farmer Sentiment Improvement Despite Financial Performance Concerns

All three broad-based measures of farmer sentiment improved in July. The Purdue University-CME Group Ag Economy Barometer Index rose 8 points to 113. At the same time, the Index of Current Conditions increased by 10 points to 100, and the Index of Future Expectations at 119 was 7 points higher than a month earlier. July’s sentiment improvement occurred even though prices for both corn and soybeans declined from the time survey responses were collected in June to July. For example, Eastern Corn Belt cash prices for corn and soybeans declined 11% and 5%, respectively, from mid-June to mid-July. Responses to the individual questions used to calculate the indices indicated that the sentiment shift was primarily attributable to fewer respondents saying that 1) conditions were worse than a year earlier and 2) fewer saying that they expect bad times in the future. Data collection for the July survey took place from July 15-19, 2024, which coincided with the dates for the Republican National Convention held in Milwaukee.

Figure 1 . Purdue/CME Group Ag Economy Barometer, October 2015-July 2024.

Figure 2. Indices of Current Conditions and Future Expectations, October 2015-July 2024.

When asked about their biggest concerns in the year ahead, the top choice among producers once again was high input costs, chosen by 34% of respondents. However, weak commodity prices were also on producers’ minds, as 29% of producers in the July survey pointed to the risk of lower crop and livestock prices as a top concern, up from 25% of respondents in June. Only 17% of respondents cited rising interest rates as a top concern, down from 23% in June, consistent with signals from the Fed that interest rates have peaked.

Figure 3. Biggest Concerns for Your Farming Operation, June 2023-July 2024.

The Farm Financial Performance Index weakened by 4 points in July to 81, leaving the index 6 points lower than a year earlier. July’s decline followed back-to-back improvements in the index in May and June. The index’s fall reflects farmers’ concerns about the impact of weakening commodity prices combined with high input prices. Although the cost of production for principal crops, including corn and soybeans, has fallen year-to-year, output prices have declined even more, raising the possibility of a cost-price squeeze for U.S. crop producers.